The retail trends that are keeping U.S. shoppers away from malls are also putting a damper on deal-making.

The number of mergers involving apparel, shoes and jewelry dropped 12 percent to 115 in the past year. And the transactions that are getting done are fetching the smallest premiums since the recession in 2008. They plunged to 3.4 percent from 23 percent a year earlier, according to data compiled by Bloomberg.

A global economic slowdown, especially in key markets like China, has also prompted deal-makers to cut valuations, which were based on unrealistic growth expectations for international and e-commerce sales, said Jeff Streader, founder of the Go Global consulting firm in Los Angeles. In addition to advising private equity investors in the consumer goods industry, he started a fund with backers from Asia to buy U.S. and European labels.

“Investors are worried,” said Streader, who sees names like Kate Spade & Co. and Michael Kors Holdings Ltd. as overvalued. “As much as I may want to buy a great brand and a retailer that’s in the marketplace right now, we’re not going to overpay based upon the valuations that were inflated.”

Premium labels Michael Kors and Ralph Lauren Corp. are grappling with competition from Amazon.com Inc. and other e-commerce companies, which have driven down mall traffic in an already crowded apparel market. The brands have also fallen victim to steep discounts at department stores — like Macy’s Inc. — which are shuttering underperforming locations, partly as younger consumers make more of their purchases online or seek out different retail experiences.

The SPDR S&P Retail ETF, an exchange traded fund that tries to replicate the performance of the S&P Retail Select Industry Index, dropped 5.9 percent in the past year, compared with a 15 percent gain in the broader Standard & Poor’s 500 Index.

Weakness in the industry has put investors and dealmakers in a bind. The concerns could limit the takeover price for, say, handbag maker Kate Spade, which has put itself up for sale, according to Streader. The valuations buyers are willing to pay — measured as a multiple of earnings — have dropped as much as 25 percent in the past six to 12 months.

Questions about where tax policy in the U.S. is headed is also taking a toll on deal-making. A Republican corporate tax reform proposal, which would eliminate companies’ ability to deduct interest payments, would increase borrowing costs. That’s holding back Manny Chirico, chief executive officer of Calvin Klein owner PVH Corp., from any major purchases for now.

“The uncertainty around the tax position impacts how you would structure an acquisition,” Chirico said in an interview “All deals have a level of uncertainty, and this is another item that you don’t have clarity on.”

For Richard Baum, a managing partner of private equity firm Consumer Growth Partners, the biggest worry is a border-adjustment tax plan, pushed by GOP House Speaker Paul Ryan. It would replace the corporate income tax with a 20 percent levy on companies’ domestic sales and imports, while their exports would be exempt. Because of the industry’s reliance on imported goods, Baum said such a plan could batter corporate earnings. The uncertainty has steered him away from investing in companies that sell consumer products and toward serviced-oriented businesses, such as salons and fitness centers.

“It can be disastrous on the buyer,” said Baum, whose firm has more than half of its deals in apparel, footwear, accessories and jewelry. “All of a sudden the business is associated with a huge tax that was not foreseeable.”

Chirico estimated the border-adjustment tax would force PVH to raise prices by 13 percent just to break even.

In terms of competition with online vendors, companies may do well to follow the example of Wal-Mart Stores, which is taking aggressive steps to battle Amazon, tapping technology and social media to drive buzz and fuel growth.

Earlier this year, Wal-Mart began offering free two-day shipping with no membership required. It spent $3 billion to buy online upstart Jet.com last year, and has since snapped up other e-tailers such as Moosejaw and ShoeBuy. The impact: Wal-Mart posted 29 percent growth in online sales in the most recent quarter, following a 21 percent increase the previous quarter.

While the retail market remains weak, there is still M&A demand for smaller brands, and investment in e-commerce infrastructure could help boost earnings and valuations, said Nanette Heide, a partner at law firm Duane Morris LLP in charge of fashion retail. There are private equity funds and companies with a lot of cash at their disposal, she said.

“If you can hit on the right acquisition, it can really be a home run for you,” she said.